NYTimes.com's Pay Wall to Provide Gauge for Non-Financial Newspapers

It’s debatable whether The New York Times’ foray into a pay-wall system — often a traffic-killer when tested by other publications — is a sign advertisers should start thinking differently about newspaper sites.

On Wednesday, the 159-year-old news organization announced that, starting next year, online readers will have to pay a subscription fee after reading a specific number of articles. The metered approach has not been tried at scale in the U.S., but has been used by the Financial Times. In the case of FT.com, registered users can read 10 articles monthly for free before having to pay $3.59 per week for more content.

NYTimes.com can only hope things go as smoothly as they reportedly have for FT.com, which introduced the model in 2007. A spokesperson for the Financial Times said the metered system and requiring casual readers to register at the site have allowed the publication to “command significantly higher [ad] rates than our competitors because of our ability to target specific groups of users, such as board directors.”

Questions remain whether non-financial dailies can accrue the same benefits. Long Island, NY-based Newsday began charging $5 a week for its Web site in late October and then saw traffic plummet 21 percent the next month, according to data from The Nielsen Company. Forrester Research analyst James McQuivey predicts that ad revenues for NYTimes.com will drop by as much as 50 percent due to the pay wall.

In the end it seems plausible that if the metered model works for NYTimes.com, other publications will attempt to follow suit. And if their adaptations prove successful, suggested Randy Bennett, senior VP of business development for the Newspaper Association of America, CPM rates will be affected.

“When people are paying for the printed product, that qualifies them in the advertiser’s mind,” Bennett said. “The idea of people making a conscious decision to pay for [online] content and the advertising associated with it — that may make them more qualified to the advertiser.”

Unfortunately for The New York Times and other non-financial dailies wanting to implement paid models, a proven format for their niche does not appear to exist.

WJS.com, online arm for The Wall Street Journal, has successfully employed a pay wall since 1997. But the Journal benefits from not having a true national rival when it comes to financial/business news, as the Financial Times is anchored in the U.K. Because of that specific reality and its “early days” adoption of a paid model, WSJ.com essentially has gotten to make up its own rules — carefully, no doubt — when it comes to paid content and advertising.

“We get premium ad rates because of the affluent, business-decision-maker audience we deliver,” explained a Journal spokesperson. “We do not sell our paid subscribers separate from our free users. We sell the total audience.”

Another paper, regional daily Arkansas Democrat-Gazette, has bundled site content with its newspaper for nine years in an effort that has helped maintain its print audience. But preserving subscriptions has come at the expense of online growth. And the Little Rock, AR-based paper — like the Journal — implemented its plan before a clear majority of U.S. households had Internet access, giving its bundled offer an unusually conditioned presence in the target marketplace. Other dailies — The New York Times and its massive national audience included — have no such luxury in 2010 and beyond.

Even NYTimes.com’s “TimesSelect” play from 2005-07 casts a bit of doubt about charging general-circulation readers for online content. It reportedly halted the initiative to encourage more site traffic because online advertising was booming in 2007. The publication believed it could make more on ads than the $10 million annual revenues generated by TimesSelect, which offered access to new opinion columns as well as archived stories back to 1851 for $7.95 a month.

How NYTimes.com will structure its metered system — in terms of free articles allowed, registration requirements, and subscription rates — has not been determined. The site currently requires users to register after opening a varying number of articles per visit, according to a spokesperson.

The NAA’s Bennett said there’s no doubt that publishers looking to increase revenues will keep an eye on the experiment in 2011. However, he noted publishers are not exactly in wait-and-see mode for 2010.

“I think this year you’ll likely see a number of newspapers continue to experiment with pay walls,” he said. “So by the end of this year, I think there will be some lessons learned. But I think it’s at least a couple of years before we see more aggressive paid strategies.”

Paul Gillin, an online marketing consultant and a former journalist who also runs a blog called Newspaper Death Watch, disagreed. He characterized publications and newspaper readers as waiting on the sidelines.

“All the research indicates that only a small percentage of online users will pay for access to the information they’re already getting for free,” Gillin said. “If [The New York Times] comes through with a micropayment-based metering system…that might kindle more interest.”